2019 (10) TMI 537 - AT - Service Tax

Tribunal Allows Cenvat Credit for Construction Inputs in Renting Property Activities

The Tribunal ruled in favor of the Appellants, M/s. Sky Star & Others, allowing Cenvat Credit for inputs used in construction activities related to ... CENVAT Credit - inputs - inputs used in construction related work - scope of amendment vide Notification No.3/2011-CE(NT) dated 01.03.2011 w.e.f 01.04.2011 - Appellants engaged in construction of a building and renting the same on completion - HELD THAT:- Learned Commissioner observed that in terms of amendment vide notification No.3/2011 CE(NT) dated 01.03.2011 with effective from 01.04.2011, credit was not admissible on the expenditure incurred for “set up” of the factory of manufacturer of premise of output service provider; the notification has only prospective effect; therefore credit cannot be denied prior to 01.03.2011, in terms of Rule 2(l) of Cenvat Credit Rules of 2004, they are inputs. Reliance placed in the case of COMMR. OF C. EX., VISAKHAPATNAM-II VERSUS SAI SAHMITA STORAGES (P) LTD. [2011 (2) TMI 400 - ANDHRA PRADESH HIGH COURT] where it was held that Cenvat Credit of duty paid on cement and steel used in construction of new jetties and other commercial buildings are entitled for input credit. Credit allowed - appeal dismissed - decided against Revenue. Issues involved:1. Disallowance of Cenvat Credit for construction-related work in the context of Service Tax liability on 'Renting of Immovable Property' and 'Maintenance and Repair Service.'Analysis:The case involved the Appellants, M/s. Sky Star & Others, engaged in construction of buildings and renting the same. The department issued a Show Cause Notice seeking disallowance of Cenvat Credit of Rs. 23,61,327, arguing that the credit inputs used in construction work cannot be used for Service Tax liability on renting services and maintenance. The original authority allowed a partial credit and confirmed a demand for Cenvat Credit. The Learned Commissioner Appeals dropped the demand, leading to an appeal by the Revenue before the Tribunal.The department argued that prior to an amendment in 2011, Cenvat credit was admissible for factory set up or output service provider premises. They claimed that the credit available during the material period (Oct 2008 - March 2011) could not be denied. The Appellants' counsel contended that the issue had been previously decided in their favor. The Tribunal considered whether the Appellants were entitled to credit of inputs used in construction while paying Service Tax for 'Renting of Immovable Property Service.' The Tribunal referred to a notification and previous case law to support the Appellants' claim for credit on inputs used in construction.The Tribunal cited a Division Bench case and decisions from High Courts to support the Appellants' entitlement to Cenvat Credit for duty paid on construction materials. The Tribunal upheld the Impugned Order of the Commissioner Appeals, dismissing the appeal filed by the Revenue. The decision was based on the definition of input/input services under Cenvat Credit Rules, 2004, and the precedent set by relevant case law.In conclusion, the Tribunal ruled in favor of the Appellants, allowing Cenvat Credit for inputs used in construction activities related to renting immovable property. The decision was supported by legal interpretations, notifications, and previous case law, leading to the dismissal of the Revenue's appeal.